Cowen downgraded Boston Beer Company (NYSE: SAM) from Market Perform to Underperform with a price target of $128.00 (from $170.00). Analyst Vivien Azer noted volume pressure in beer and cider, as well as heightened competitive activity in hard seltzer, and he cut EPS estimates as a result.

Azer explained, "On the heels of another month's worth of disappointing Nielsen data, we downgrade SAM to Underperform and lower our PT to $128 (-17% ETR). While we appreciate that SAM will benefit from the launch of Truly Spiked, and new packaging and media for core Sam Adams, structural headwinds to the company's core assets present meaningful earnings risk. We are now ~9% below consensus for FY17."

Discussing craft trends, the analyst said, "While we expect trends to improve with brand activation, the benefits of new packaging and marketing will prove less meaningful than expected given the recent deterioration in the overall craft beer market. With the Top 4 and Top 10 craft brands posting volume declines in Nielsen, and with ~5,000 craft breweries in the U.S., softer trends will likely only lead to an even more intense competitive landscape."

On hard soda and cider, Azer said, "While we had been cautiously optimistic earlier this year that the launch of Coney Island Hard Root Beer would buoy sales growth, that has clearly not materialized. Following SAM's launch, ABI and TAP both entered the market such that Coney Island sales have generally been falling sequentially since Month 2 (and were down 63% YoY in the most recent Nielsen data, as they cycled the brand's peak launch month). The hope was that this would prove to be an offset to the declines in cider (which we believe reflected mix shift to hard soda), but SAM's cider business has fallen DD throughout 2016."

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